Business Opportunities Investment Scams

By: AARP Outreach & Service | Source: AARP.org | May 30, 2006

"Earn up to $100,000 in the first year with no money down! At the Seminar for Success, we'll show you how to multiply your money in six months or less. Our experts will teach you the latest insider secrets for making money fast. Don't miss this valuable opportunity…"

"Work 10 hours a week/earn 50K+/year…"

"Big $$$. Little investment. Distribute established products in your area. No competition. Part time/Full time…

Money Maker or Money Taker?

Whether it's a flier for a free seminar, an unsolicited e-mail or a newspaper advertisement, offers to start a business are everywhere. While the messages may sound appealing, they are often announce a business opportunity that is actually a scheme to take your money rather than to make you money. Promoters of fraudulent business or franchise opportunities are likely to apply high-pressure sales tactics to get you to buy in. So take your time and do your research before you get involved. If it's a legitimate business opportunity, it'll still be around when you're ready to decide.

Take these steps to make sure the business is legitimate:

• Get all earnings claims in writing and be sure the information includes information about other clients who have earned at least as much as the promotion claims.
• Interview references provided by the promoter. Business opportunity promoters are required to give potential purchasers the contact information of at least 10 prior purchasers who live the closest to the potential purchaser.
• Study the business opportunity's franchise disclosure document. Most business opportunity promoters must provide this information to potential purchasers. It will include information about whether the company has faced any lawsuits from prior purchasers or lawsuits alleging fraud.
• If the business involves selling products from well-known companies, call the legal department of the company whose merchandise is being promoted. Find out whether the business opportunity and its promoter are affiliated with the company. Ask whether the company has ever threatened trademark action against the business opportunity promoter.

What You Can Do

To check on an investment offer or salesperson, or to file a complaint, contact your state securities regulator. You can find your state securities regulator from the North American Securities Administrators Association. 

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